Country’s biggest oil refinery to cost $30 billion: IndianOil

India's biggest oil refinery that state-run Indian Oil Corporation Ltd (IOCL), BPCL, HPCL and EIL plan to set up on the west coast will cost $30 billion or Rs 2 lakh crore, a senior official said.

"The 60 million tonnes a year refinery and a mega petrochemical complex will be set up in two phases. Phase-1 will be 40 million tons together with an aromatic complex, naphtha cracker and polymer complex," said Sanjiv Singh, Director (Refineries), IOC.

Phase-1 will cost Rs 1.2-1.5 lakh crore and will come up in 5-6 years from the date of land acquisition, he said. "The entire refinery will include three crude units of 20 million tonnes each - first of these will be part of phase-1.

"The mega complex will require 12,000-15,000 acres of land and two-three sites on coast of Maharashtra are being explored," he said. The second phase will cost Rs 50,000-60,000 crore, he added.

IOC has been looking at west coast for a refinery as catering to customers in West and South was difficult with its refineries mostly in the North. HPCL and BPCL have also been looking at a bigger refinery because of constraints they face at their Mumbai units.

"The refinery will produce petrol, diesel, LPG, ATF and feedstock for petrochemical plants in plastic, chemical and textile industries in Maharashtra," he said. Fifteen million tonnes a year is the biggest refinery any public sector unit has set up in one stage.

IOC recently started its 15 million tonnes unit at Paradip in Odisha. Reliance Industries holds the distinction of building the biggest refinery in India till now.

It built its first refinery at Jamnagar in Gujarat with a capacity of 27 million tonnes, which was subsequently expanded to 33 million tonnes. It has built another unit adjacent to it for exports, with a capacity of 29 million tonnes.

The refinery being planned by the state-owned firms will be bigger than that. The phase-1 itself will be bigger than any one single unit.

It will also be accompanied by a petrochemical complex. Being on the west coast will provide the unit a natural advantage of easily sourcing crude oil from the Middle-East, Africa and South America, Singh said, adding east coast was not being considered as shipping crude oil to east coast will add at least USD 1 per barrel to cost.

Also, moving products to consumption heartland from west will not be difficult. India has a refining capacity of 232.066 million tonnes, which exceeded the demand of 183.5 mt in 2015-16 fiscal.

According to International Energy Agency (EA), this demand is expected to reach 458 MT by 2040.

IOC has six refineries with a total capacity of 54.20 million tonnes. It also has subsidiary refineries with 11.50 million tonnes capacity. Paradip has taken its refining capacity to 80.7 million tonnes.

"The investment is part of quality upgradation exercise undertaken to meet emission standards set under the Central Government's auto fuel policy," IOC Executive Director S K Dhar Gupta told PTI. The upgradation will make the refinery, located at Koyali village on the city's outskirts, adequately equipped to supply 100 per cent BS-IV compliant diesel and petrol, he said.

Of the total monthly petrol production of 1.60 lakh tonnes, the refinery is currently supplying about 1.50 lakh to 1.55 lakh tonnes of BS-IV compliant petrol, he said. The BS-IV compliant fuels have low sulphur level at 50 ppm. Under BS-III norms, petrol and diesel have sulphur content of 150 ppm and 350 ppm, respectively.

The reduced sulphur content will greatly lower air pollution levels caused by auto emissions. "Gujarat refinery has been undergoing revamp of its diesel treating units and the process is expected to be over in January 2017 after which it will supply BS-IV diesel," said Gupta.

However, the IOC facility will continue to produce BS-III diesel from January-April 2017 for enabling old vehicles to smoothly switch over to BS-IV norms. "We want to give them enough time for switching over to BS-IV norms for diesel," said Gupta.

The refinery, which has 13.7 MMT crude processing capacity, has been revamping all its units to supply BS-IV fuels throughout the country by April 1, 2017, he said.